Vedder Price is pleased to announce that the firm’s Private Fund Formation group is expanding through the elevation of a new shareholder and the addition of two new associates. This growth will enhance the depth and geographic scope of the group, which represents private fund sponsors and investors around the world in the formation of private investment funds and related regulatory and compliance matters.

Jeff VonDruska, a member of the group based in the firm’s Chicago office, has been elevated to Shareholder. Mr. VonDruska represents investment advisers, family offices, private equity funds and hedge funds in a range of fund formation, governance and compliance matters. He also counsels clients with respect to examinations and investigations conducted by the Securities and Exchange Commission, Commodity Futures Trading Commission, U.S. Department of Labor and other regulators. Prior to joining Vedder Price as an associate in 2016, Mr. VonDruska worked as counsel for a large fund of hedge funds adviser, focusing primarily on the legal due diligence aspect of the firm’s investment program and with responsibility over numerous regulatory compliance matters.

Mr. VonDruska joins fellow Private Fund Formation group member Cody J. Vitello who was elevated to Shareholder last year. Mr. Vitello focuses his practice on private equity, venture capital and real asset fund formation. He has particular expertise in launching complex fund of one vehicles and joint ventures with large institutional investors.

In addition to Mr. VonDruska’s elevation, the Private Fund Formation group is also adding two new associates in the firm’s office in New York City, Laure Sguario and Rachel Behar. These additions complement the group’s other resources which are spread across the firm’s offices in London, Chicago, Washington D.C. and San Francisco.

Ms. Sguario is an experienced private funds attorney who has assisted with the launch of numerous private funds both domestically and in the European Union. She frequently advises clients regarding regulatory and compliance issues under European and Luxembourgish securities and investment funds laws, and is fluent in French. With continued regulatory changes in Europe we are particularly excited to add resources to help our clients liaise with offshore counsel to navigate foreign offering issues.

Ms. Behar adds to our fund formation team by bringing day-to-day investment advisory and private fund regulatory and formation experience. At her prior firm, where she served as an investment management attorney, she frequently counseled hedge fund and private equity fund clients on regulatory matters, and regularly advised clients on responding to SEC examinations and subpoenas. In addition to fund formation, Ms. Behar has counseled institutional clients on investment due diligence. She also is an additional resource for the firm’s regulatory filing team.

“I am very pleased to welcome Laure and Rachel to Vedder Price and congratulate Jeff on being elected Shareholder,” said Joseph M. Mannon, Chair of the Private Fund Formation group. “This expansion reflects both the increasing demand from our clients for high-quality legal services and their confidence in our ability to help them successfully meet their legal goals. I look forward to the strengthened client relationships this growth will facilitate.”

To learn more about the firm’s Private Fund Formation group, please click here.

Vedder Price is pleased to announce that four attorneys have been named Shareholders in the firm, effective April 1, 2021.

“On behalf of the Executive Committee, I’d like to congratulate Michelle, John, David and Jeff on this career milestone,” said Dana S. Armagno, Vedder Price Operating Shareholder. “This group of lawyers is deeply committed not only to ensuring the success of our clients, but to building the firm of the future. Their focus on delivering outstanding client service will help the firm grow and succeed in the years ahead and we look forward to working with them in their new leadership roles.”

Michelle T. Olson, elevated from Associate and a member of the Labor & Employment practice area in the Chicago office, also serves as Co-Chair of the firm’s Pro Bono Committee. Ms. Olson regularly counsels employers on day-to-day employment law and human resources matters, including federal and state antidiscrimination laws, medical leaves of absence and accommodation requests, employee discipline and discharge, whistle blower and retaliation claims, and wage and hour violations. She helps employers navigate challenging workplace investigations, including allegations of harassment, bullying and retaliation, and provides employers with thoughtful and practical advice in the development of separation and settlement agreements, employee handbooks, training programs, and related policies and procedures. From 2016 to 2020, Ms. Olson was selected as an Illinois Rising Star in Employment Litigation: Defense by Super Lawyers. She earned her J.D. from Northwestern University School of Law, cum laude, and her B.S. from the University of Illinois with highest honors.

John K. Burke, elevated from Associate and a member of the Intellectual Property and Intellectual Property Litigation practice groups in the Chicago office, regularly counsels clients in patent, trademark, copyright and trade secret matters, with a focus on intellectual property litigation, prosecution and transactional matters. In 2021, Mr. Burke was recognized by The Best Lawyers in America: Ones to Watch in the field of Intellectual Property Law. Prior to law school, Mr. Burke spent three summers working at a major semiconductor manufacturer and obtained his Bachelor of Science degree in Electrical Engineering. He earned his J.D. from The University of Notre Dame Law School, magna cum laude, and his B.S. from The University of Notre Dame, cum laude.

David N. Swendsen, elevated from Associate and a member of the Finance & Transactions practice area in the Chicago office, executes transactions from start to finish on behalf of his clients. He has in-depth experience in traditional buy-side/sell-side M&A, minority investment transactions and venture capital transactions. Mr. Swendsen specializes in private equity and investor-side representation. He also acts as outside general counsel for start-up and middle-market clients, drafting and negotiating key commercial contracts and advising them on a variety of legal matters. Mr. Swendsen was recognized by The Best Lawyers in America: Ones to Watch (2021 Edition) in the field of Mergers & Acquisitions Law. Prior to joining Vedder Price, Mr. Swendsen was a Supply Chain Management Consultant in Chicago, where he developed cost-saving solutions for his clients. He earned his J.D. from the University of Illinois College of Law, magna cum laude, and his B.A. from the University of Illinois.

Jeff VonDruska, elevated from Associate and a member of the Investment Services group in the Chicago office, represents investment advisers, family offices, private funds, registered mutual funds, closed-end funds, exchange-traded funds and other financial institutions on a broad range of legal, regulatory, governance, formation and compliance matters. Mr. VonDruska has significant experience in regulatory and compliance matters affecting investment advisers, including registration and marketing. He also counsels clients with respect to examinations and investigations conducted by the Securities and Exchange Commission and other regulators. Mr. VonDruska has been selected for inclusion as an "Illinois Rising Star" by Super Lawyers Magazine in 2019 and 2021. Prior to joining Vedder Price, Mr. VonDruska worked as counsel for a large fund of hedge funds adviser. He earned his J.D. from the John Marshall Law School, cum laude, and his B.A. from Lake Forest College, with distinction.

Members of the Vedder Price Government Contracts group successfully represented AECOM Management Services, Inc. (an Amentum company) in protesting the Navy’s award of a $534.9 million task order to provide contractor logistics support for F-5 N/F and F-16 A/B aircraft to Vertex Aerospace, LLC (“Vertex”).

Attorneys Kevin P. Connelly, Kelly E. Buroker and Jeffrey M. Lowry established that the Navy had not treated AECOM fairly during the evaluation and award process, through how it engaged in interchanges with AECOM versus the awardee, Vertex. The U.S. Government Accountability Office (“GAO”) agreed, sustained AECOM’s protest and recommended that the Navy re-open interchanges with AECOM, provide AECOM an opportunity to revise its proposal and for the Navy to then perform a new evaluation and make a new award decision.

To read Law360’s coverage of the case, please click here.

Vedder Price is pleased to announce it represented Evriholder Products, LLC (“Evriholder”), a portfolio company of The Edgewater Funds, in its investment in Murray Sales Inc. (“MSC”). MSC is a Canadian designer and global distributor of innovative impulse and kitchenware products under the Joie brand.

The deal team advising Evriholder included Michael A. Nemeroff, Shelby E. Parnes, Joseph T. Bueche, Marie H. Godush, Braden D. Shaw and Ashlee M. Germany (Finance & Transactions), Matthew P. Larvick and Grant Kaiser (Tax), and John K. Burke (Intellectual Property).

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The Uniformed Services Employment and Reemployment Rights Act (“USERRA”) may require employers to pay employees for reserve duty if they provide paid leave for other, “comparable” absences from work, according to a February 3, 2021 decision of the Seventh Circuit Court of Appeals in White v. United Airlines, which reversed and remanded a decision of the Northern District of Illinois dismissing the plaintiff United pilots’ putative class action.¹

The plaintiff pilots in White serve in the U.S. Military Reserve Forces, and argued that USERRA requires United to grant them paid leave and profit sharing credit for at least some of their reserve duty time because the airline pays, and allows profit sharing credit to, pilots serving jury duty and taking sick leave. In dismissing the White case, the trial court rejected the pilots’ arguments, finding that granting them the same rights and benefits allowed for jury duty and sick leave would create a de facto universal requirement to provide paid military leave, and that jury duty and sick leave were not comparable to military leave because reservists volunteer their time, while jury duty is compulsory and sick time is involuntary.

Is Military Leave Comparable to Jury Duty and Sick Leave for USERRA Purposes?

The White pilots predicated their appeal on USERRA and Department of Labor regulations effectuating it.²  Under USERRA, employers must give employees on reserve duty the same “rights and benefits” provided to other employees taking comparable furloughs or leaves of absence “under a contract, agreement, policy, practice, or plan…” The DOL’s regulation interprets this to mean that a reservist employee “must be given the most favorable treatment accorded to any comparable form of leave when he or she performs service in the uniformed services.”

But what is a “comparable form of leave”? According to the DOL, in determining whether a leave is comparable to military leave, the “duration of the leave may be the most significant factor to compare,” but “the purpose of the leave and the ability of the employee to choose when to take the leave should also be considered.” The White pilots maintained that United violated USERRA by paying for sick and jury duty leave, but not paying for time devoted to reserve duty. They maintained that jury duty and sick leave are comparable to military leave, and that USERRA requires that reserve duty time be paid.

The Seventh Circuit Decision in White

While the Seventh Circuit did not hold that United must pay for military leave, it did reverse the District Court’s dismissal and remand the case for the comparability analysis that it found the District Court had prematurely cut off. The Appellate Court rejected the District Court’s conclusion that providing the United pilots with the same rights and benefits associated with other comparable leave would amount to a de facto mandate to provide paid military leave, noting that “USERRA mandates only equality of treatment; it does not specify how generous or how parsimonious an employer’s paid leave policies must be.” So, for example, an employer that provides no paid leave is not required to provide paid military leave; USERRA only requires employers to provide paid military leave if they provide paid leave in other comparable nonmilitary leave settings.

The Seventh Circuit also disagreed with the District Court’s comparability analysis of jury duty and sick leave on the one hand, and military leave on the other. “Comparability analysis,” the Appellate Court said, “is not affected by the fact that the servicemember has voluntarily signed up for military service… Instead, what matters is an employee’s control over the timing of her leave of absence—i.e., whether she has the option to choose when to take a given stretch of leave.” The Seventh Circuit refrained from actually determining whether sick and jury duty leave are comparable to military leave, however, remanding that determination to the trial court. The White court emphasized the importance of evaluating comparability with the DOL’s three-factor test: considering the duration of the leave together with its purpose, and the reservist’s ability to choose when to take leave.

A Developing Area of Law

Federal appellate authority in this area other than White remains to be developed.³  A few federal district courts have, however, provided some additional, albeit not entirely consistent, direction. A Texas federal court, for example, recently held that American Airlines pilots’ military leave was not comparable to sick leave, because the annual average of reservists’ military leave was 23.2 days, while the same pilots’ annual average sick leave was just 6.6 days.⁴  The same Texas trial court also addressed the lesser factor of leave purpose, finding that the purposes of American’s sick leave and military leave policies were different. “Military leave,” the court said, “is provided as the need arises going forward—when the pilot is called to service. Sick leave is provided (accrues or is earned) based on past days worked.”⁵

Likewise, another Northern District of Illinois decision involving United Airlines cited similar distinctions between sick leave and military leave, noting that “sick or vacation days which are accrued and spent on vacations and short-term illness… happen to all people every year,” while military leaves of absence, “are granted based on the length of some underlying, generally unforeseen circumstance.”⁶

But on February 3, 2021, the Northern District of California certified a class of reservist Southwest Airlines pilots by citing, in-part, the ‘averaging’ approach. The District Court reasoned that the issue of comparability was susceptible to common proof in a class setting precisely because the defendant airline could average the yearly military leave taken by its pilots and compare that to the average yearly sick leave taken.⁷

Battle plan for reservists’ employers

The White decision requires employers to place military leave on equal footing with the most generous comparable leave they provide for other purposes. Pending additional direction from the courts, employers that maintain a general paid-time-off policy (one that allows employees wide latitude in making their leave elections subject to a stated maximum) are safest granting the same pay and benefits credits for USERRA military leave purposes as are provided for comparable, paid nonmilitary leaves. Employers that grant paid leave only for discreet purposes, however, must determine whether the reasons for which they grant it are comparable to military leave, and should consider erring on the side of granting paid military leave commensurate with the most generous pay and benefits practices they apply to other, comparable, nonmilitary leave events.

In conducting the required comparability analysis, the White decision instructs employers to compare the duration of the leave, the purpose of the leave, and the employee’s ability to choose when to take the leave, but to weigh most heavily in this equation the length of the leave. Unfortunately, while the length-of-leave factor may appear straightforward, it presents its own challenges. The time reservists require for military leave may vary widely, with some reservists regularly serving just two days at a time, and others being on duty for year-long deployments.

The White decision also makes it clear that the ability of an employee to choose when to take military leave is pertinent to the “employee’s control over the timing of her leave of absence—i.e., whether she has the option to choose when to take a given stretch of leave.” Although in most circumstances a reservist employee will be unable to choose the “timing of her leave of absence,” there may be situations in which she can choose when she takes military leave, and/or adjust her work schedule to reconcile it with reserve duty time off work so that paid leave time can be conserved for other purposes.

Finally, employers of reservists should review with counsel their written paid leave policies, and consider listing military leave among the expressly permitted uses for electing PTO against a general paid leave bank, or adopting an express military leave policy that treats paid reserve leave time comparably with other qualifying leave events.

If you have any questions regarding the topics discussed in this article, please contact Nicholas Anaclerio at +1 (312) 609 7538, Aaron A. Bauer at +1 (312) 609 7726 or any Vedder Price attorney with whom you have worked.

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¹ White v. United Airlines, Inc., 987 F.3d 616, 627 (7th Cir. 2021).
² 38 U.S.C. § 4316(b)(1) and 20 C.F.R. § 1002.7(c).
³ While the Seventh Circuit refused rehearing in White, the time has not yet run for a discretionary appeal to the U.S. Supreme Court through a petition for a writ of certiorari.
⁴ Hoefert v. Am. Airlines, Inc., 438 F. Supp. 3d 724, 739 (N.D. Tex. 2020).
⁵ Id.
⁶ Moss v. United Airlines, Inc., 420 F. Supp. 3d 768, 775 (N.D. Ill. 2019).
⁷ See, Huntsman v. Sw. Airlines Co., No. 19-CV-00083-PJH, 2021 WL 391300, at *7 (N.D. Cal. Feb. 3, 2021), and note that the Ninth Circuit Court of Appeals declined to entertain Southwest’s appeal from the district court’s class certification decision without opinion on March 10, 2021, in Jayson Huntsman v. Southwest Airlines Co., 21-80010 (stating simply, “[t]he court, in its discretion, denies the petition for permission to appeal the district court’s February 3, 2021 order granting class action certification..”).

In this issue:

• Compliance Date Set for SEC’s New Adviser Marketing Rule
• SEC’s Division of Examinations Issues 2021 Examination Priorities
• SEC Staff No-Action Letter Permits Funds to Self-Custody Certain Loan Interests
• SEC Staff Seeks Industry Feedback on Cross Trade Practices
• SEC Issues Statement and Request for Comment on Custody of Digital Assets by Special Purpose Broker-Dealers
• SEC Position Allows Insurance Companies to Rely on Prior Mutual Fund Substitution Orders
• SEC Requests Comment on Potential Money Market Fund Reform Options
• Important Developments in LIBOR Transition 
• Recent Announcements by the SEC and DOL Highlight Emphasis on ESG Investing
  
  
  

Download the Investment Services Regulatory Update below.

Please join Vedder Price attorneys Deborah Bielicke Eades, W. Thomas Conner, Juan Arciniegas and Nathaniel Segal for a discussion about the practical implications of the SEC’s new rule governing the use of derivatives by registered investment companies.

As adopted, the new derivatives rule reflects significant changes to the rule as initially proposed, and represents a comprehensive overhaul of the current regulatory framework governing the use of derivatives by mutual funds, closed-end funds, ETFs and business development companies.

During this webinar, participants will gain key insights regarding the following:

• The SEC’s thinking and considerations when adopting the new rule
• Practical implementation considerations for derivatives usage in a variety of situations, including exceptions for limited derivatives users, board reporting and oversight, and the treatment of leveraged/inverse exchange-traded funds
• The broad impact of the new rule on the asset management industry

We strongly encourage you to submit confidential questions for the panelists in advance via the registration page, or to send your questions directly to rsvp@vedderprice.com.

CLE Pending

Vedder Price is an accredited CLE provider in California, Illinois and New York and, when possible, a sponsor in Virginia.

Kevin A. MacLeod and Dylan Potter will present at the Ishka + Investing in Aviation Finance: Europe event on April 28 & 29. The virtual event brings together institutional investors and industry specialists looking to explore funding and aircraft investment opportunities across Europe and the rest of the world. Vedder Price is a proud sponsor of the event.

Mr. MacLeod will participate in the Live Q&A, “When will the aircraft ABS deal flow pick up?” at 8:35 AM on April 28. This discussion will analyze how the aircraft ABS market will continue to evolve in 2021 and the years to come.

Mr. Potter will participate in the Q&A discussion, “Buying at the bottom of the market: M&A and aircraft trading opportunities” at 9:15 AM on April 29. He and his co-panelists will examine the new wave of M&A activity brought on by the pandemic and outline the M&A process from start to finish.

For more information, click here.